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January 19, 2013

India [ Images ] is hesitant to implement all aspects of US and European Union sanctions against Iran, a Congressional report has said, attributing this to New Delhi's [ Images ] reliance on Tehran with regards to Afghanistan and the historic, cultural and economic ties between the two nations.

"India is implementing UN sanctions against Iran but its cultural, economic, and historic ties -- as well as its strategic need for access to Afghanistan -- have made India hesitant to adopt all aspects of US and EU sanctions on Iran," the independent and bipartisan Congressional Research Service said in its latest report on Iran.

"India first signalled greater support for sanctioning Iran in late 2012 when its central bank ceased using a Tehran-based regional body, the Asian Clearing Union, to handle transactions with Iran," said the report.

Apparently perceiving international sentiment for tightening sanctions on Iran, India has been reducing its dependence on Iranian oil, CRS said.

Since 2008, India has reduced its imports of Iranian oil by volume and as a percentage of India's total oil imports, to the point where, by the end of 2012, Iran was only supplying about 10 per cent of India's oil imports, down from over 16 per cent in 2008, it said.

"Despite requiring significant investment to switch over refineries that handle Iranian crude, Deputy Oil Minister R P N Singh told India's parliament on May 15, 2012, that India would cut Iranian imports by another 11 per cent from May 2012 until the end of India's fiscal year in March 2013," the CRS told US lawmakers on its latest report on Iran.

"The Obama [ Images ] Administration welcomed the pledge, and India received an exemption from P L 112-81 sanctions on June 11, 2012. Indian refiners have cut buys from Iran largely in line with the government's requests, although some months might show fluctuations as batches of oil shipments arrive. India's exemption was renewed on December 7, 2012," it noted.

The CRS said India appears to be distancing itself from participation in the Iran-Pakistan gas pipeline project.

India reportedly has been concerned about the security of the pipeline, the location at which the gas would be officially transferred to India, pricing of the gas, tariffs, and the source in Iran of the gas to be sold.

If Iran resolves its disputes with the international community, India may envision an alternative to the pipeline project as a means of tapping into Iran's vast gas resources.

"During high-level economic talks in early July 2010, Iranian and Indian officials reportedly raised the issue of constructing an underwater natural gas pipeline, which would avoid going through Pakistani territory. However, such a route would presumably be much more expensive to construct than would be an overland route," it said.

According to a table compiled by CRS, even as India has considerably reduced its import of oil from Iran from a high 320,000 barrels per day (bpd) in 2011 to 280,000 bpd in 2012, it is the second largest importer of crude oil after China, which in 2012 imported 400,000 bpd.

CRS said the international sanctions has adversely affected Iran's economy to the point where key Iran leaders are considering the need for a nuclear compromise.

"Oil exports provide about 70 percent of Iran's government revenues and Iran's oil exports declined to about 1.25 million barrels by the end of 2012 -- a dramatic decline from the 2.5 million barrels per day Iran exported during 2011.

"The cause of the drop has been a European Union embargo on purchases of Iranian crude oil that took full effect on July 1, 2012 coupled with decisions by several other Iranian oil customers to substantially reduce purchases of Iranian oil in order to comply with a provision of the FY2012 National Defence Authorisation Act (P L 112-81). To date, 20 countries have been deemed in compliance," it said.

"The loss of hard currency revenues from oil -- coupled with the cut-off of Iran from the international banking system and the decline of Iran's foreign exchange reserves -- caused a collapse in the value of Iran's currency, the rial, in early October," CRS said.

These steps have not restored public confidence in the regime's economic management -- inflation has soared, industrial production has fallen, and some of the more expensive medicines are reported to be in short supply, it said.

The CRS said sanctions may be slowing Iran's nuclear and missile programs by hampering Iran's ability to obtain some needed technology from foreign sources.

However, Department of Defence and other assessments indicate that sanctions have not stopped Iran from developing some new weaponry with indigenous skills.

"Iran is also judged not complying with UN requirements that it halt any weapons shipments outside its borders, particularly with regard to purported Iranian weapons shipments to help the embattled Assad government in Syria.

"And, international sanctions targeting the regime's human rights abuses do not appear to have altered Iran's repression of dissent or its efforts to monitor public use of the Internet," it said.

ISLAMABAD: The International Monetary Fund expressed concern over Pakistan's falling exchange reserves on Friday, but stopped short of echoing analysts' warnings that it could face a new balance of payments crisis within months without a new loan package.

"There is still a balance of payments concern … the foreign exchange reserves in the central bank have declined," Jeffrey Franks, the regional adviser to the Fund on Pakistan told a news conference. "Foreign direct investment has fallen sharply but other capital inflows are also very weak."

Franks said that Pakistan has not sought a new loan programme. However, if it did, it would have to implement strict measures for achieving economic targets needed to qualify for a new IMF programme, DawnNews reported.

Pakistan's state bank currently has about $9 billion, enough to cover about two months' worth of imports, if cash deposits in private dollar accounts are not counted, Franks said.

In 2008, the country averted a balance of payments crisis by securing an $11 billion IMF loan package. The IMF suspended the programme in 2011 after economic and reform targets were missed. Some analysts have since warned about the prospect of a new balance of payments crisis. Pakistan owes the IMF just over $6.2 billion. It is due to repay $1.6 billion in the first six months of 2013, Franks said, a schedule that will strain reserves and may accelerate the slide of the rupee currency. The rupee currently stands at 98.6 to the dollar, a depreciation of about 8 per cent over the course of 2012.

"Those reserves are not yet at a critical level but it's important to address the policy – the underlying policy issue well before you get to the point where they become critical," said Franks.

But the current government has failed to enact the reforms needed to boost reserves and qualify for a new IMF programme.

Broaden tax base, slash subsidies

The Fund wants Pakistan to broaden its narrow tax base and slash subsidies it says mainly benefit the wealthy.

Franks said further funding was contingent on a consensus being reached by political parties on comprehensive, permanent financial reforms and firm implementation of them.

Analysts think the IMF is unlikely to cut a deal soon as the government will probably lack the political will to take bold measures ahead of elections due this spring.

"The earliest the IMF can step in is in June," said Sakib Sherani, a former finance ministry official who now heads the Macro Economic Insights research institute. "It's a matter of a few months before there is a crisis."

Mohammad Khan, a former commerce minister, said the looming election virtually ruled out any deal soon with the Fund.

"This is a government that has been irresponsible for five years, and now they are going to spend extravagantly to win these elections," he said.

Most Pakistanis are already angry over the handling of the economy. Demonstrators cited a lack of jobs, high food prices and power cuts in mass protests this week led by cleric Tahirul Qadri demanding the government's resignation.

The IMF predicts growth will touch 3.5 per cent in the fiscal year beginning in July against last year's figure of 3.7 per cent and slow to three per cent the following year – less than half the rate needed to absorb the population entering the workforce.

Growth is hindered by chronic power cuts that have hurt key industries like textiles. Mismanagement of the power sector costs an estimated $1.5 billion ever year, according to the Pakistan Planning Commission.

The IMF estimates that inflation for this fiscal year will reach around 9.5 per cent against 10.8 per cent last year, Franks said. Wages have not kept up, causing widespread anger. Franks said the Fund wanted Pakistan to reduce its fiscal deficit – which could exceed seven per cent this year – by closing tax loopholes and cutting expenditure like energy subsidies.

"It's not just the lack of energy, it's the unreliability, the unpredictability," said Franks. "That's what's holding your growth back more than any other thing."

IMF rules out writing off or restructuring heavily in debt Pakistan's loans

By ANI |

Islamabad, Jan. 19 (ANI): The International Monetory Fund (IMF) cannot write off or restructure Pakistan's loan, the head of the organization has said.

While speaking to the media, Jeffrey Frank further said that Pakistan has not formally sought a new program.

He added that that if they did want to seek a new program then their economic strategy must radically change as losses of government institutions had drowned the current economic strategy, the News International reports.

Frank said that Pakistan was in need of billions of dollars in revenue in expenditure as it was suffering from a current deficit of 16.24 trillion, adding that Pakistan's foreign exchange reserves had diminished.

The IMF mission chief also said that taxation on agriculture, retail and sales should be made more effective and tax relaxations and concessions should be done away with, the report said.

He further said that Pakistan's major issue is power deficiency and power theft was behind the increasing deficit, it added. (ANI)

The International Monetary Fund (IMF) may sign a loan programme with the caretaker government if all major political parties agree on a broader set of action plans. However, before that is possible, Pakistan will have to take some tough prior actions, says the Fund's representative for the region.

In a luncheon meeting with a group of journalists here on Friday, Jeffrey Franks, adviser to the IMF for the Middle East and Central Asia, spoke at length on the grave economic situation the country is faced with. He also shed light on the Fund's ongoing dialogue with the government, aimed at building consensus on a set of conditions needed to be fulfilled before and during the course of a fresh bailout programme. Franks was accompanied by the new IMF Country Representative Mansoor Dailami.

"The current polices will have to be readjusted in order [for Pakistan to become eligible] for an IMF programme. The IMF has discussed with the government what kind of policies would be necessary," said Franks.

The IMF's prescription to Pakistan includes a healthy measure of – not surprisingly – increasing taxes, cutting expenditures, withdrawing electricity subsidies and increasing interest rates to check inflation, which is expected to rebound soon and devalue the currency further.

"We have agreed with the government that the deficit eventually needs to come down to 3-3.5% of the GDP in three years, from the current level of over 7%," revealed Franks. "According to our one-month assessment, Pakistan's currency is overvalued by 5-10%. Modest depreciation might yield positive results for the economy," he added. "The monetary policy also needs to be calibrated to bring down inflation to between 5-7%."

He underscored the need for having "broadest and deepest possible political support for any new programme". Franks also sought support at the highest levels, besides taking provinces on board, before the government enters into a formal arrangement with the Fund. He said that if political parties agree on a broader reforms agenda, the IMF can be flexible on how Pakistan goes about achieving it.

"The decision whether or not we will enter into a programme with the interim government will be made by the IMF management: however, if there is very strong and broad political support, going beyond the interim government, it might be possible," Franks said, while responding to a question asking about the timing of the programme.

The IMF official observed that Pakistan's problems require long-term solutions, and that any new programme will not last less than three years.

Franks disclosed that, according to the IMF assessment, this year's budget deficit will remain around 7-7.5% of the GDP. In absolute terms, the IMF projects a Rs1.624 trillion deficit – a whopping Rs516 billion or 2.3% higher than government estimates. Besides the significant shortfall in revenues, Pakistan also may not be able to complete the auction of the 3G telecom spectrum, causing another shortfall of around Rs75 billion.

To add icing to that unsavoury cake, the economy will grow just 3.5% this year according to the IMF's estimates, as against official projections of 4.3%.

"The number one bottleneck to growth is the energy sector. The number two bottleneck is the energy sector, and the number three bottleneck is also probably the energy sector," said Franks.

"Private sector credit growth is very weak; large scale manufacturing is positive, but very low; and we don't see robust export growth," observed Franks. He further said that while declining inflation is a good indicator, it is also worrisome because domestic demand continues to remain weak. He also criticised the government's tax collection efforts, which he said are indicative of weaknesses in the economy.

Even though the IMF has projected a current account deficit of a low 0.7% of GDP, Franks warned that even this low level is dangerous due to drying foreign inflows. As a final blow, he also ruled out any restructuring of IMF loans.

He agreed that tough actions may cause a temporary drop in growth, but insisted that they were necessary for achieving macroeconomic stability.

Franks also hinted that the central bank should be made an independent part of plans for the new programme.

Published in The Express Tribune, January 19th, 2013.

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Decisions taken in the meeting include a ban on publicly displaying weapons across the province.

Balochistan Governor Zulfiqar Ali Magsi has decided to give police and Frontier Corps (FC) personnel ‘a free hand’ to crack down on elements responsible for the deteriorating law and order situation in the province.

According to an official handout, the decision was taken in a high-level meeting held at the Governor House on Wednesday to solve issues plaguing Balochistan.

Decisions taken in the meeting include a ban on publicly displaying weapons across the province. All law enforcement agencies and provincial administration departments were directed to ensure compliance with the ban.

The governor also directed concerned quarters to compensate the family members of those who lost their lives or were injured as a result of violence in the province till January 31, 2013. He also announced a Rs10,000 stipend for rebels who decide to quit armed resistance in the province.

IS our silent PM aware of the seriousness of the ground situation as it obtains on the LoC? In the past he was quick to express concerns when am Indian was arrested on suspicion of terrorism. He is pathetic and his body language even more worse. I am forced to use such strong language, because the government is filled with nincompoops. When the COAS is warning Pak of strong retaliatory action and exhorting his field commanders not to remain passive and meet fire with fire, this bloke who heads the Foreign Ministry talks of the amount of time invested in peace efforts with Pakistan. May I ask what is the rich dividend that this country has reaped through its investments? ZERO. All we got was Kargil, Parliament Attack, bomb blasts in major cities and Mumbai 26/11. What is this government and its ministers like the FM up to? The author must be reminded that our FM is an utter failure and so was his predecessor - remember Sharm el-Sheikh. So let us not give too much credit to the FM and his ministry.

It is true that our men and officers both in service and those who have been martyred and retired are a neglected lot. Full credit to you for highlighting it.

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January 18, 2013#Surat'Safe City Surat' project of Surat police CM inaugurates CCTV camera surveillance network in SuratChief Minister:"The project will show path to the nation in establishing reliable vigilance network for crime detection"Rising above the PPP model, the project has become the best example offour 'P' formula of 'People's Public Private Partnership'

Chief Minister Narendra Modi today dedicated to people closed-circuit television (CCTV) camera surveillance network – 'Safe City Surat' – of the Surat police. Inaugurating this unique public safety project based on public private partnership (PPP) model, the Chief Minister exuded faith that the project will show path to the nation in establishing reliable vigilance network for crime detection.

The project will be exemplary for other cities of Gujarat and will also infuse new vigor in the judicial system, he said.

The vigilance network covers over 200 km. radius of Surat city. About 104 CCTV cameras are installed at 26 strategic places. The Chief Minister went to the command and control centre of the project at the police commissioner's office and sought information on various aspects of the project. He said the CCTV cameras will prove to be a 'third eye' of Surat police.

The first-ever in India, this project has been equipped with the latest technology at the cost of Rs.10.50 crore.The Chief Minister congratulated the police for setting up the network which will be instrumental in crime check and traffic control. He also congratulated the police for adding one more 'P' to the PPP model and coming up with four 'P' formula of People's Public Private Partnership.

He said the project is the best example of convergence of human and technological capacities. Speaking about the crucial role of technology for the checking of crime the Chief Minister said, "Today when people with criminal mentality have started misusing latest technology, the good use of the same by police for the security of common men has become necessity."

The Chief Minister said that Gujarat is having 24 hour power supply and a well-planned optical fiber network, which has helped Surat in initiating such project. "Gujarat police force is the youngest in India in average age. The state government's approach is to recruit IT-trained youths in all cadres of police from constable to Police Inspector", he said.

He hoped the project will be proved effective in crime detection and in dropping the crime rate. He suggested that the project can also give additional benefits to the municipal corporation and to the judicial system.

Minister of State for Home Rajnibhai Patel said that during Mr.Modi's leadership the state is witnessing a safe and secure atmosphere, besides scaling new heights of growth. The state government is working hard for the safety and security of the citizens, he said.

Surat Police Commissioner Rakesh Asthana said the Chief Minister was the motivational force behind this project. "The Surat city is prepared to meet any challenge", he said

The incident of killing and mutilation of two soldiers of the Indian Army—and especially the beheading of one of them— by intruding Pakistani forces on the Indian side of the Line of Control (LoC) has threatened to derail the India-Pakistan peace process. On the back of the public outcry over the incident, a usually soft-spoken Prime Minister Manmohan Singh issued a statement that there cannot be "business as usual". The government has decided to "pause" the implementation of the liberal visa regime on 'technical' grounds. Against this backdrop, the following questions come to mind: is India-Pakistan peace process sustainable? Can they be de-linked from the events on the ground, especially in Kashmir? Can Pakistan's fledging democracy be a partner in this long and tardy path of peace?

Scepticism about the longevity of bilateral dialogue has been a perennial feature of discourse on India-Pakistan relations ever since the two countries restarted the peace process in the aftermath of the ghastly Mumbai attack with the Indian government extending a hand of peace in spite of certain reservations expressed in the country regarding the future of the peace process.

The two countries have been observing a ceasefire along the LoC since 2003, although the number of ceasefire violations has increased over time. From the Pakistani side there has been a slow move towards increasing contact with India without at the same time insisting on the 'core issue'; in effect, Pakistan seemed to be adopting a holistic approach towards its relationship with India. Two reasons are self-evident for this new Pakistani approach. First, there appears to be a broad understanding among the political parties in Pakistan to stay engaged with India with the objective of reducing bilateral tensions. Second, there is a conscious effort not to over-emphasise India as a enemy, which inevitably empowers the Army and emboldens its position vis-à-vis the political forces in Pakistan.

For the past few months, Pakistan seemed to be balancing the interests of the political parties with the interest of the Army. While it may be difficult to segregate these two interests into water-tight compartments, nevertheless, a majority in the Army do strongly believe that India is an existential threat in spite of their recognition that the internal security threat remains the most critical challenge confronting Pakistan today.

This is not to deny that there are vested interest groups in Pakistan that have in the past tried to invent a link between non-resolution of the Kashmir issue and stability in Afghanistan. Even Zardari, perhaps at the behest of these forces, was seen to be raising the Kashmir issue at the United Nations. The attempt by Pakistan Foreign Secretary Jalil Abbas Jillani to meet the Hurriyat Conference leaders in Delhi in July 2012 was not only to assure these leaders that Pakistan has not abandoned their cause but also to send a signal to the Pakistani establishment that the government is conscious of the 'core interest' while pursuing the agenda of peace.

While the Pakistan Army was on board on Islamabad's decision to grant MFN status to India and broaden trade ties, it was clear that it was not in a position to oppose the decision at a time when its relationship with the United States had deteriorated over the Salala attack which killed 22 soldiers. Instead, it chose to oppose the government's policy through its militant protégée, i.e., Difa-e-Pakistan Council (DPC)—a conglomeration of radical militant groups—which completely opposed the decision to grant MFN status to India. This led to a delay in the signing of the liberalised visa regime and grant of MFN status to India by the beginning of 2013. Pakistan's flip-flop on the issue became obvious during Rehman Malik's India visit when he made outrageous remarks equating the Mumbai terrorist attack with the demolition of the Babri Masjid and linking Abu Jundal to Indian intelligence. This created quite an uproar in India questioning the future of the process of engagement.

Yet, the fact remains that both countries have too much at stake in the peace process. For India, it provides an opportunity to rise above the narrow security paradigm and establish durable relations with Pakistan. For Pakistan, it is a way out of the multiple crises it is beset with. The internal security situation has worsened over time threatening the stability of the state and the societal structure. In the year 2012, 6,211 people were killed in terrorist attacks. The Army has been under constant attack by TTP militants. The economic situation is declining very fast. At this juncture, one would imagine that better political and economic relations with India would serve Pakistan well. However, one does not see much change in the Army's security doctrine in spite of a realization in Pakistan that there is a need to 'redefine and redesign a new defence doctrine'.

The current spate of ceasefire violations seems to have been prompted by the desire in the Army to create an opportunity to internationalise the Kashmir issue. This was evident when Foreign Minister Hina Rabbani Khar suggested a UN probe into the ceasefire violations, knowing fully well that India is allergic to any such suggestion. Zardari's speech in the UN earlier showcasing Kashmir as a symbol of the world body's failure needs to be seen as a reassertion of the pro-Kashmir lobby in the government's India policy in recent months.

In spite of the recent flare-up along the LoC, India must continue to engage Pakistan in dialogue especially at this moment when Pakistan's experiment with democracy seems to be unravelling in the face of constant badgering from the Supreme Court and the military's allegedly quiet intervention in politics through events like Qadri's long march. Keeping the existing political turmoil in Pakistan in mind, any upping up of the ante by India would strengthen the very forces that seek to spoil the process of engagement. This could have potentially disastrous consequences for the democratic forces in Pakistan.

It is important to engage the civilian government in Pakistan as it is in India's interest, in spite of the former's occasional baiting on behalf of the powerful Army. In order to keep the Army out of politics, India needs to invest in Pakistan's democratic constituency. The leaderships in both countries need to recognize that the peace process will face several hiccups and there will be continuous attempts to derail it. The move to de-escalate is a welcome development. Thus, even as it presses for action against the people responsible for beheading of Indian soldiers, India should take care not to disengage from the process of dialogue.

LONDON — Between 25,000 and 50,000 people marched on Islamabad this week to demand the resignation of the government and electoral reforms. At the head of the movement is Muhammad Tahir-ul Qadri, a cleric who recently returned to Pakistan from Canada.

But perhaps more than Qadri's calls, or the controversy over his intentions, it's his curious abode that may say more about Pakistan's prospects: Since Monday the cleric has been sounding the clarion from within the confines of a yellow shipping container parked in front of Parliament.

Qadri's container is bullet-proof and powered by an electric generator; it contains a heater, a fridge, a microwave oven, mattresses and a toilet. As onetweeter put it: "Wow!!! #TuQ's container is better than a normal middle-class family's house." What's more, Qadri can safely address his supporters for hours on end from within, thanks to a reinforced window.

Growing up in Karachi, I was accustomed to seeing blue, orange and red containers stacked high along the roads leading to the city's port. But what were once symbols of the globalized economy and regional trade have become markers of Pakistan's deteriorating security situation.

Shipping containers, which have been used to transport NATO supplies through Pakistan to Afghanistan, now represent rocky U.S.-Pakistani relations. In 2011 and 2012, to protest the killing of Pakistani soldiers in American airstrikes, the Pakistani government blocked the passage of containers for seven months and threatened to only allow the resumption of shipping for exorbitant transit fees. The containers have also become a favorite target of militants who oppose Pakistan's cooperation with the United States in the fight against terrorism.

First Pakistani military and it's ISI tried Mr. Imran Khan, the cricketer, to stage the drama for the military take over against Zardari's elected civilian Government, but when he failed, they have now imported this Cleric from Canada to do the job. They think they can fool the world by saying look, he is a moderate and is against Taliban and Al-Qaida, Bla Bla Bla, so that the west accept him, or they just to use him as a scare tactic to tell the west that look, if the green light is not given to the military for a coup, then these extremists will take over the country and get the nuclear weapons in their hand Bla Bla Bla.. In either case military is trying very hard to create situations that help them to bring down Zadari's Government and take over. All these explosions and suicide bombing that is happening in Pakistan are a part of this ISI game, to make Zardari's Government fail and look bad in the eyes of world as incompetent and to pave the way for another military coup. This is the first time that military have waited for too long to take over. They are getting very itchy and impatient with Zardari and the civilian rule. They do not want the elections to happen and another civilian Government can take place for another 4 more years... !!! : )

January 15, 2013

Yesterday, Xinhua reported that China "has inked for the first time South China Sea islands on its new official maps in equal scale to that of the Chinese mainland."

The National Administration of Surveying, Mapping and Geoinformation (NASMG) announced that "the new vertical-format maps of China, published by Sinomaps Press, include more than 130 islands and islets in the South China Sea, most of which have not been featured on previous maps of China."

The Indian Prime Minister had still not realised that the Five Principles were a one-way road; but he was much too engrossed in his future role not only as the 'neutral' chairperson of the cease-fire commission for Indochina but also the self-appointed leader of the newly independent nations of Asia and Africa.

Zhou Beiyan, the editor of the new maps declared: "The old maps, which were in horizontal format, only featured bigger islands such as the Xisha, Zhongsha and Nansha islands. These were illustrated in the bottom-right corner at half the scale used for the Chinese mainland."

The new maps will not be available to the public until the end of January.

But according to the Communist mouthpiece: "The maps will be very significant in enhancing Chinese people's awareness of national territory, safeguarding China's marine rights and interests and manifesting China's political diplomatic stance.

The publisher of the maps asserted that "the new vertical maps have marked clearly the major South China Sea islands and demonstrated their geographic relations with surrounding island countries as well as surrounding islands and islets".

This reminds me of the map aggression against India in the early 1950s, at the time the infamous Panchesheel Agreement was negotiated and the foolishness of the Indian Government which did not react to the Chinese 'map' aggression.

Nehru's Visit to Beijing in October 1954

The visit of the Indian Prime Minister to Beijing marks the apogee of the 'friendship' between India and China and perhaps also the first beginning of the doubts in Nehru's mind.

For the first time on October 19, 1954, the Indian Prime Minister met Mao in the Great Hall of the People in Beijing. The Great Helmsman began the talks by dwelling "on the age-old associations and the new friendship between China and India".

This remark speaks for itself. While the Indian leaders were speaking of 2000 years of friendship, Mao was speaking of 'new friendship'.

Nehru had two talks with Mao, but neither party raised the Tibetan issue or the border question. Mao was more interested to know the reaction of the Indian leader on the use of the atomic bomb . It is during this meeting that Mao first termed the bomb as a 'paper tiger'.

Nehru hesitantly told Zhou: "…Supposing we publish a map showing Tibet as a part of India, how would China feel about it?…"

During the three meetings between Nehru and Zhou Enlai, once again the 'small matters' were not discussed, except for a short mention about the Chinese maps which showed large parts of India and Burma within the Chinese territory.

Nehru hesitantly told Zhou:

As regards maps, I just casually mentioned to you some of the anxieties of our neighbours. We are not worried on this point. Our frontiers are clear but I mention it in the case of Burma because questions of this kind become a handle in the hands of enemy. Supposing we publish a map showing Tibet as a part of India, how would China feel about it? But as I said, I am sure, the maps were old maps and you did not mean it.

Finally at the end of meeting, Nehru dared ask Zhou a question directly linked to the six-month old Agreement on Tibet. As with the 17-Point Agreement three years earlier, the Chinese had scant respect for the provisions of the Sino-Indian Agreement. Though always ready to use its preamble, the Chinese leaders treated the Agreement as a mere piece of paper, at least as far as the main clauses were concerned. This was less than six months after the signature. For a simple matter such as the rights to go on a pilgrimage, the Indians (and Tibetans) were harassed. Nehru explained as mildly as possible to his counterpart the difficulties encountered by the pilgrims:

There is a small matter which I may take this opportunity to mention to you. Some complaints have recently been received from pilgrims going to Tibet. Some of them are apparently being harassed by guards and I hope that Your Excellency will look into the matter. As you are aware, every summer there is a large pilgrim traffic between India and Tibet. As an example of the sort of harassment to which these pilgrims are subjected, I would mention that one of my friends was stopped by the border guards who told him that he could not be regarded as a pilgrim because he was not wearing a monk's gown.

The Indian Prime Minister had still not realised that the Five Principles were a one-way road; but he was much too engrossed in his future role not only as the 'neutral' chairperson of the cease-fire commission for Indochina but also the self-appointed leader of the newly independent nations of Asia and Africa.

Two small incidents indicate the future direction in which the relations between India, Tibet and China would go.

The Sino-Indian conflict of 1962 was far away and seemed unlikely in 1954 in the hey-day of Hindi-Chini Bhai Bhai. I do not know on what basis Nehru foresaw this, but the 1962 war was of India's making.

During the course of his visit, Nehru had occasion to meet the young Dalai Lama for the first time. As we have seen, Tibet and the border issue had been totally ignored in the talks with the Chinese leaders. This encounter with the young Lama was for Nehru like a mirror reminding him of the main provisions of the treaty (i.e. Tibet). The Dalai Lama recalls:

We [in Tibet] had heard his name. India also was a country very close to our mind. I had personally heard about Nehru.

When we heard that we will meet him, there was a bit of excitement.

Pandit Nehru led by Zhou Enlai and many Chinese dignitaries were lining up when he reached the place where I was standing.

Zhou Enlai said: 'This is the Dalai Lama.' Nehru remained motionless, no speech, not looking in the eyes.

He just stood in front of me, without speech, without moving, motionlessly he remained like that. I was a bit embarrassed. I told through the Chinese interpreter: 'I have heard a lot about you, and today I am very happy to meet you'.

Nehru did not give a particular response, he seemed maybe happy, then he went to the next person. That was my first experience [with him].

[That day] I thought and felt that from Nehru's side, there will be no support for Tibet and no support for the Dalai Lama. During a short moment, many things that occurred from 1949 till 1954 [passed] in his mind, like lightning, that is my feeling.

Was this strange silence of the Indian Prime Minister a sign that he had begun to realize that he had betrayed his own statement four years earlier in the Lok Sabha ?

Another incident is worth relating. Sultan M. Khan, then an official in the Pakistani Embassy in Beijing remembers:

Sino-Indian relations continued to get closer, and Nehru received a very warm welcome on his visit in 1954. A few days after his visit, the Indian Embassy held a reception at which I overheard an Indian diplomat, who had acted as Nehru's interpreter, telling some of his colleagues that just before his departure for Shanghai, Nehru was in a very sombre mood, and had said to senior members of his delegation that after his talks with Mao, he was pessimistic about the relations with China, and foresaw a conflict in the future. The Sino-Indian conflict of 1962 was far away and seemed unlikely in 1954 in the hey-day of Hindi-Chini Bhai Bhai. I do not know on what basis Nehru foresaw this, but the 1962 war was of India's making.

Perhaps after hearing Mao's comment on the atomic bomb, Nehru was unsure of the success of his Five Principles. Though one cannot be certain of the veracity of Khan's comments, they appear to have some truth. It is certain that in June-July 1954 the Chinese leaders had got the support that they needed from India at a very crucial moment of their history. It helped them to impose their view in Geneva. Six months later, their needs were not the same and this partly explains Mao's tough talk with Nehru.

Last week’s face-off with Pakistan on the Line of Control, following the mutilation of the bodies of two soldiers killed on the border, has stoked predictable responses. While those who demand an eye-for-an-eye are right in their own way, the peacenicks, too, make a legitimate point when they claim that this is not the time to abandon the path of reconciliation. For the moment, it does seem, despite belligerent remarks by the defence minister, that India has pulled back from the brink; the situation is yet fragile though.

The bigger worry is whether this was a one-off, or a warning of an emerging challenge for India.

There are several factors that are rapidly converging, which suggest that India, which has evolved as the unchallenged economic centre of South Asia and, hence, a source of major envy, is likely to come up against a strategic threat posed by increased infiltration by state and non-state sponsored terrorists from Pakistan. Freelance terror may become the norm rather than the exception, with attendant consequences.

A lot of this has to do with the emerging contours of the new global energy map that is less reliant on oil and gas, and the growing disengagement of the US in the region.

The US has already announced that it will be drawing down its troops stationed in Afghanistan by 2014 and, more recently, even suggested that they will withdraw completely, even though the job of restoring Afghanistan is far from over and there is a strong likelihood of civil war breaking out in that country.

In a quick recap, it was the US, assisted by a few Western nations, which had first invaded Afghanistan and, later, Iraq to effect regime changes. Since then, it has been engaged in an eyeball-to-eyeball confrontation with Iran over the latter’s stealthy move to nuclear arm itself. After the Arab spring, most of West Asia is in a stage of foment or, as in the case of Syria, embroiled in a civil war. The US retreat is a tacit admission that its tactics have run their course.

At the same time, the global energy map is beginning to see the first signs of change. It may not happen immediately, but there are sufficient signals to suggest the emergence of a new energy order over the next two decades.

The pressure to commercialize non-conventional energy sources, such as solar, have gained momentum, but are yet to acquire critical mass to challenge hydrocarbons. There is, however, considerable research being undertaken by the US and China, two of the biggest consumers of fossil fuel, which may offer an alternative sooner than expected.

The two front-running options are to generate energy from thorium and shale gas. According to an article published in Foreign Affairs magazine—The New Power Map, World Politics After the Boom in

Unconventional Energy by Aviezer Tucker—new technologies are emerging that make drilling and extraction of energy from underground shale formations increasingly easy and cheap.
Tucker then goes on to claim, “Hydraulic fracturing has been used widely for only about the past five years. But the result—a staggering glut of natural gas in the United States—is already clear. The price of natural gas in the country has plunged to a quarter of what it was in 2008.”

Tucker argues that China possesses the largest deposits of shale gas of any country in the world (886 trillion cu. ft compared with the US’s 750 trillion, the world’s second largest deposits). “According to Chinese government estimates, the country has enough natural gas to provide for its domestic needs for up to two centuries,” he adds.

Similar initiatives are being undertaken to shift to thorium-based nuclear reactors. Writing in the UK’s Telegraph newspaper, Ambrose Evans-Pritchard says that once again there is a race between China and the US to come up with the right technology to tap thorium. “At the least, it could do for nuclear power what shale fracking has done for natural gas—but on a bigger scale, for much longer, perhaps more cheaply, and with near zero CO2 emissions.”

Connecting the dots, it is clear that both China and the US are slowly, but steadily, developing alternatives to fossil fuel. While this may or may not force a downward pressure on the prices of fossil fuels, it is clear that West Asia, the world’s biggest supplier, will gradually lose its strategic importance to both countries. Already, the US hydrocarbon imports are down to 45%. In other words, the US is less likely to be inclined to expose its military in the region.

To put it bluntly, the region will have to fend for itself. In the current state of chaos, India could be rapidly played up as the next big threat and, consequently, a target. Given the geographical contiguity, it is highly vulnerable to such a threat. If it is any consolation, it will be terminal for Pakistan—already its tryst with sponsoring terror has led to a near annihilation of the fief of government.

It is not that the situation can’t be handled. For that, however, first the problem has to be acknowledged; second, and more importantly, both countries have to give up on their favourite hobby of giving each other a bloody nose and look to cooperation—this, obviously, is more a message for Pakistan, where the military continues to run with the hares and hunt with the hounds.

Anil Padmanabhan is deputy managing editor of Mint and writes every week on the intersection of politics and economics. Comments are welcome at capitalcalculus@livemint.com

NEW DELHI: India on Monday demonstrated its renewed resolve to fight fire with fire along the volatile Line of Control, directing all its battalion commanders on the fiercely-contested boundary to retaliate with all their might if the Pakistani Army provokes them by violating the ceasefire or pushing militants into J&K.

"I expect all my commanders on the LoC to be aggressive and offensive in face of provocation and fire...No passivity is expected from them. Their response has to be measured and for effect," said a tough-talking General Bikram Singh, a day ahead of Army Day celebrations.

The fact that the Army chief issued an unequivocal warning to Pakistan to cease and desist from misadventures along the border is a confirmation there is going to be no immediate de-escalation of tension, especially as a defiant Pakistan refused to own up to the beheading of an Indian soldier and mutilation of another's body by its elite SSG commandos on January 8.

Speaking around the same time that Pakistan brushed aside India's charges at the brigadier-level flag meeting at the Chakkan-Da-Bagh crossing point in Poonch district, Gen Singh accused Islamabad of resorting to "outright lies".

Pakistani Army's cross-border raid on January 8 was a "premeditated and pre-planned" operation that would have needed at least 10 days of preparation and reconnaissance, he said. The Indian jawan's beheading was a "gruesome, most unpardonable act" that went against the "basic ethics" of soldering and tenets of the Geneva Convention, he added.

Although Gen Singh emphasized the current tension would not escalate into a conflagration, holding that several stages have to be crossed before the two countries go to a full-scale war, he did admit the first stage of the spiral had been reached.

The blunt acknowledgment coincided with hardening of the anti-Pakistan mood which would test those in the government who want tension to be defused for the sake of the peace process. The toughening of the popular sentiment found reflection in Congress's endorsement of Shiv Sena's opposition to the participation of Pakistani players in the India Hockey League as well as BJP's bellicose exhortation that Indian troops decapitate 10 Pakistani soldiers for each Indian one.

Gen Singh said the Indian Army was quite clear that it "reserved the right to retaliate at a time and place of its choosing", confirming what TOI had reported on January 10.

India has reasons to be furious. This is not the first time Indian soldiers have been beheaded by the Pakistani Army-jihadi combine, with their heads being taken back as "trophies" across the LoC, admitted Gen Singh.

Infamous Pakistani terrorist and al-Qaida member Ilyas Kashmiri was part of the raid on an Indian post in the Nowshera sector in 2000, for instance, during which one Indian soldier of the 17 Maratha Light Infantry was beheaded and six others killed.

More recently, two jawans were decapitated during the turnover between the 19 Rajput and 20 Kumaon Regiments in the Keran sector in July, 2011. "We have to put pressure on Pakistan, nationally and internationally, to make its Army accountable," said Gen Singh.

"Though the beheading has angered us at the strategic level, it was a tactical operation and we will respond at the tactical level now...We do not plan to up the ante. We will uphold the ceasefire as long as the adversary respects it but will retaliate if provoked," he added.

The Army chief admitted the January 8 cross-border raid had exposed "some tactical lapses" on the Indian side but said this was not the time for an inquiry to be conducted since it would affect the morale of the forces. For now, even as corrective measures are underway, "we won't remain passive when attacked", he said.

On the Siachen Glacier-Saltoro Ridge imbroglio, the Army has told the government it should not let go of the "strategic gains" achieved after shedding a lot of blood - over 850 Indian soldiers have died in the glacial heights since 1984 - till the "trust deficit" with Pakistan is bridged.

Pakistan has to first agree to the sequential pre-requisites of authentication, delineation and demarcation of the relative troop positions before any talk of demilitarization. "The area is strategically important for us and we should continue to hold the heights," said Gen Singh.

January 14, 2013

The barbaric Pakistani attack on Indian soldiers in the Jammu area on January 8,2013, and the brutal killing and mutilation of two soldiers with one of them beheaded called for a three-pronged response:

·An exercise to express the solidarity of the nation with the families of the martyred soldiers and to initiate action to maintain their honour and dignity. This should have been the responsibility of the Prime Minister's Office which should have taken a series of gestures like the PM visiting the families of the martyred soldiers, asking one of his senior officers to represent him at their cremation, a televised address to the armed forces to assure them of the solidarity of the nation and working for an all-party consensus on the subject to prevent partisan exploitation of the issue. One has an impression that these important aspects were totally neglected by the PM and his entourage.

·A second exercise to determine how the Pakistanis were able to carry out this barbaric attack well inside Indian territory without resistance from the Indian troops posted in the area and to tighten up the prevention of trans-LOC violations. This was the total tactical responsibility of the Army. In his media briefing on January 14, Gen.Bikram Singh the Chief of the Army Staff, firmly and lucidly explained the action taken by the Army in this regard. He clearly explained that trans-LOC aggressions will be dealt with aggressively and offensively with appropriate retaliation not ruled out as an option. The Army, which has been entrusted by the Government with the responsibility for protecting the LOC, is empowered to take whatever measures are necessary and the COAS made it clear that it will do so.

·The third exercise was to ensure that the Pakistan Army's tactical barbarity across the LOC did not seriously disrupt the strategic dialogue between the political leaderships of the two countries. This has been competently handled by the Foreign Office.

2. In my view, the serious deficiency has been with regard to the first exercise due to lack of appropriate leadership initiatives from the Ministry of Defence and the PMO. In cases like this, taking initiatives for reassuring the forces of national solidarity and for building up a national consensus is the responsibility of the head of the Government. In the US, whenever the Armed Forces suffer a serious set-back, it is the President who steps forward and exercises leadership in dealing with the situation instead of leaving it to his Defence Secretary. So too in other Western countries.

3.Dr.Manmohan Singh, who prefers to operate from the background instead of from the forefront, chose to let the Defence Minister handle the first exercise. He failed to handle it himself. As a result, there was no leadership either from the Defece Minister or the PM. This created an unfortunate impression of neglect and indifference in the minds of the relatives of the martyred soldiers and possibly in the minds of other soldiers too.

4. The inept handling of the first exercise has again drawn attention to the insensitivity, indifference and casualness with which successive Governments have been handling matters relating to the welfare and honour of our ex-servicemen, whether retired or martyred. This needs urgent corrective steps. The over-all responsibility in this matter should be transferred to the PMO and the PM should set up a standing Task Force to deal with the welfare and honour of our ex-servicemen, retired or martyred. ( 15-1-13)

JAISALMER: Pakistan Intelligence Agency ISI have reportedly opened two new centres to train a large number of youngsters on terrorism. The centres are in the Pakistani side just opposite the Jaisalmer-Ganganagar area along the international border.

Sources said one of centres is only 50 km away from the Jaisalmer border in the Ghotaki area of Pakistan. It is housed in an underground bunker and managed jointly by ISI and Jaish-e-Mohammad
Similarly, opposite the Ganganagar border in Bahvalpur area, ISI officials and Jaish-e-Mohammad cadres are brainwashing many youths and imparting them with terrorist training. These terrorists could be pushed into the Indian border taking advantage of mist and fog.

Upon receiving this information from across the border, the BSF has put its jawans on high alert especially during mist and fog and the borders are being strictly guarded. Jawans from reserve and training companies have also been deployed at the border.

According to the intelligence and defence sources, ISI has once again started weaving terrorist activities in Rahimiyar Khan, Ghotaki and Bhavalpur area in Pakistan opposite the Rajasthan border. Rahimiyar Khan and Ghotaki are opposite the Jaisalmer border, while Bhawalpur lies opposite Ganganagar and in these areas, new terrorist training activities have started.

In Ghotaki area in Pakistan, the new centre in an underground bunker imparts four hours terrorist training daily to college youths aged between 20 and 30 years. The training is being imparted under the supervision of Pakistan army officer Col Anwar Ali in which the youths are taught use of weapons, explosives, setting up IED and several other terrorist activities. The Jaish-e-Mohammad is extending all types of help for managing this training camp, where local people are not allowed to go near it.

Intense training was given to the youths the entire day last Friday, sources said.

The sources also said there has been information that a new alliance has been made between Jaish-e-Mohammad (JeM) and Babbar Khalsa at Rahimiyar Khan. A few days ago, JeM and Babbar Khalsa group under the leadership of ISI officers organized a meeting, in which a strategy to revive terrorism in Punjab in India and a plan to carry weapons and explosives to agents of Babbar Khalsa, were discussed.

Sources further said despite strict vigilance on the border adjoining Punjab, ISI has managed to intensify its efforts to push weapons, explosives and heroin consignments into Ganganagar. The sources added that ISI has given directions to increase contact with the spies in Ganganagar area and to help these terrorists get inside Indian territory to conduct terrorist activities.

BSF Rajasthan Frontier inspector general P C Meena said there is heavy fog at the international border, these days and taking advantage, undesired elements from across the border could make efforts to intrude into the Indian territory. Jawans deployed at the international borders adjoining Jaisalmer, Ganganagar and Bikaner have been asked to be on high alert and intensify the vigilance and patrolling has been intensified, he said.

I think we are entering into an unpredictable phase in counter-terorism cooperation with the US. The US Exit Strategy, no doubt mid-wifed by the ever devious British, has daangerous implications for us. The concentration will not be on emiminating "Al qaeda and its affiliates" as President Obama asserted. The real problem is that most Americans are not prepared to admit the reality that the Taliban is an Al Qaeda "affiliate", as is the Lashkar e taiba. The "immunity"' to former ISI Chief Lt. Gen. Shuja Pasha by the State Department of the class action suit in New York against the LeT is a manifestation of how far the Obama Administration is prepared to go to absolve the ISI of its sins.and this tendency will grow once Senator Kerry assumes charge as Secretary of State.

Given these developments the parting of ways with the US on counter terrorism may well become inevitable. Despite what Praveen Swami has said, he personally acknowledges that present tensions have risen primarily because of covering fire and support on the LoC by the Pak army to Lashkar e taiba infiltration. And the Lashkar now has the objective of undemining the democratic process in J&K by killing elected members of village panchayats.

I think that despite American exhorations, an effective and measured response militarily from our side is necessary and should not be ruled out, despite our weak kneed Government. Even the Congress Party is fuming. We have to look after our interests and not forever to subordinate these interests to American "imeratives" for their "exit strategy" in Afghanistan.

January 13, 2013

Gandhinagar: Narendra Modi received lavish praise today from India Inc at the biennial Vibrant Gujarat summit that began today, where the chief minister of Gujarat employs his marketing savvy to drive investment in his state.

Mr Modi, in his address to the gathering, promised the creation of three million additional jobs through the various development initiatives undertaken by his government. On Twitter the Gujarat Chief Minister tweeted, "Earlier, Gujarat was the gateway to the Globe from India. Now it is becoming the Global gateway to India.

Earlier, speaking at the summit, Mukesh Ambani, the chairman of Reliance Industries, said "In Narendra Bhai, we have a leader with a grand vision." He announced a Rs. 500-crore university that will be set up in collaboration with the Gujarat government. (Special Feature: At Vibrant Gujarat Summit, India Inc praises Modi)

His younger brother, Anil - a headlining rapprochement was reached recently - acknowledged "respected elder brother Mukesh Bhai" in his opening remarks before going on to call Mr Modi "a king among kings." There was more. "Narendra Bhai has the Arjuna-like clarity of vision and purpose." He said the chief minister's skills have "acted as a huge magnet for investors and entrepreneurs from India and across the world in the past decade."

Mr Modi was re-elected for a third time as chief minister of Gujarat last month.

Initiated by Mr Modi in 2003 to attract investment after the violence and an earthquake in 2001, the event is attended by thousands of corporate officials who pledge billions in investment, although in reality only a fraction has seen the light of day. Of 12,40,000 crore rupees in investment proposed at the 2009 event, just 8.5 per cent had been spent as of November 2011, according to state government data.

Industry in Gujarat is helped by a long coastline and plenty of barren land that is easy to turn over to factory use.

Mr Modi has also been able to leverage the well-acknowledged business acumen of Gujaratis, a prosperous global diaspora and the support of billionaires such as Adani Group chief Gautam Adani and Mukesh Ambani who controls Reliance Industries, India's most valuable company.

"Under Modi's regime, there has been significant improvement in infrastructure growth, significant improvement in industrialisation, as well as agriculture," said Jahangir Aziz, senior Asia economist at JP Morgan. "But what has been overplayed is initial conditions were actually pretty decent in Gujarat."

Critics say that while Mr Modi has indeed encouraged investment and helped bring reliable electricity and law and order, double-digit growth has not been shared broadly enough. In the five years through March 2010, some states - including Tamil Nadu and Karnataka - did better at bringing down poverty levels.

Led by Mr Modi, his party the BJP won 115 of the state assembly's 182 seats last month. The scale of his victory has fuelled speculation that he could lead the BJP in 2014 against the Congress party, though he repeatedly asseverates his commitment to working in Gujarat. His prime ministerial ambitions are also threatened by allegations that he did not do enough to stop the communal riots of Gujarat in 2002, in which more than 1,000 Muslims were killed.

Mr Modi lured Tata Motors to the state in 2008 after the company's plans to build a factory for its low-cost Nano car were thwarted by farmers in West Bengal.

Ford Motor and Maruti Suzuki are also building plants in Gujarat - high profile investments that carry the added benefit of acting as marketing tools.

In the seven years through March 2011, Gujarat's economy grew an annual 10.08 per cent at constant prices, against 6.45 per cent in the eight years through March 2002 (Mr Modi took office in October 2001), which was still ahead of the all-India average of 6.16 per cent. A handful of states, including Maharashtra and Tamil Nadu, clocked bigger gains over the same recent period.

By comparison, policy gridlock at the national level has contributed to a drop-off in corporate investment, putting India on track to record its slowest annual growth rate in a decade.

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